iSuppli: Pre costlier than expected

The Palm Pre’s flashy display packs more than a visual punch – it also is the largest cost driver for the device, according to an iSuppli teardown analysis.

Like the iPhone, the Palm Pre is expensive to make. Unofficial estimates indicate it cost Palm between $140 and $160 to manufacture. The smartphone is currently being sold by Sprint for $199 after a $100 rebate. The Pre’s screen, an advanced Low-Temperature Polysilicon LCD display, cost $21. Combined with the Pre’s touchscreen module, the device’s display hits a whopping $39.50.

The device’s other primary cost contributors stem from its memory and processing power. The teardown revealed that the Palm Pre uses the same design as the iPhone for its processing. The Palm Pre’s design is split into two core spheres: the applications processor portion and the wireless interface portion.

“Most of the so-called ‘iPhone killers’ iSuppli has torn down keep costs down by having one – and only one – core silicon asset. However, this approach burdens a single processor with multiple functions, degrading performance,” said Andrew Rassweiler, director and principal analyst for teardown services at iSuppli. “This Pre’s two-pronged solution may be more costly, but should yield a superior-performing smartphone.”

The device also has a relatively large quantity of SDRAM: 2 Gbits. Most smartphones, including the iPhone 3G, incorporate only 1 Gbit or less of SDRAM. iSuppli speculates that the larger amount of memory was needed to support the Pre’s ability to multi-task applications, a key competitive advantage of the Pre’s webOS operating system.

In addition, the Pre uses an optical sensor to detect when the device slides out. Other devices typically incorporate a magnet in their sliding function. iSuppli reports that the optical sensor may have been necessary because of the Pre’s optional inductive charging stand, which uses a magnet to hold the Pre to its base and could confuse a conventional sliding function.

The Pre also uses a fixed lens on its digital camera instead of an auto-focus lens, and employs proximity sensing to detect its closeness to the user’s face in order to dim the screen and conserve energy.

According to the dissection, Texas Instruments, Qualcomm, Sony and Samsung Electronics supplied the crucial processing and display technologies that differentiate the Pre from its competitors.